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A commercial peacemaker

As secretary general of the Arbitration Institute of the Stockholm Chamber of Commerce, Annette Magnusson...

As secretary general of the Arbitration Institute of the Stockholm Chamber of Commerce, Annette Magnusson is one of the leading women working in international arbitration, acting as a strong voice for arbitration institutions.

As long as Sweden’s arbitration reputation remains a core topic among practitioners, Annette Magnusson will increasingly find herself in the limelight. It is a role she is passionate about. Magnusson speaks fast with a slight Swedish accent, engaging the listener with her enthusiasm. Her energy and dedication for her work is equally evident from the success of the Arbitration Institute of the Stockholm Chamber of Commerce (SCC), and also from her work in promoting arbitration globally.

This is an area she cares about deeply, whether discussing the role of arbitral institutions, possible reforms or on the role of arbitration in international affairs. With such a progressive and practical approach, the SCC is in good hands.

Magnusson took over the SCC presidency in 2010, replacing Ulf Franke who retired after 35 years at the helm. This is her second term at the institution, having been Deputy Secretary General and legal counsel of the SCC from 1998-2005 where she had frequent contact with Swedish legislators in matters of commercial law.

Before joining the institution, she was involved in international arbitration and strategic issues in Mannheimer Swartling Advokatbyrå AB’s dispute resolution practice, and previously headed the knowledge management function, responsible for strategic planning, at Baker & McKenzie in Sweden.

A NORDIC TRADITION

Sweden has a long history of arbitration, something which has made it an obvious seat for resolving disputes for several decades. It owes this history not only to its geographical location between East & West, but also thanks to strong social and governmental support driving arbitration as a key area of law. Sweden’s lack of a commercial court makes arbitration all the more significant in commercial life with many companies including arbitration clauses in their contracts.

“We have had arbitration as a form of dispute resolution for centuries before we had statutory law,” explains Magnusson.

She adds that arbitration is embedded into Swedish commercial life and very well-respected by the courts.

The large number of arbitration specialists in Sweden is another key reason the country has developed as such a strong jurisdiction for arbitration. She notes that the international arbitration cases seated in Sweden have “fuelled the growth in this area”. She adds that the legal community as a whole is very constructive, which has allowed for progress. The country’s long history of arbitration has also placed the SCC in a good strategic position, politically. In the wake of sanctions, many have speculated that Russian parties have begun to look beyond London to solve their disputes. However, Magnusson says: “Russia has been looking towards Sweden for the last 50 years. Sweden has traditionally been viewed a neutral venue for East-West commercial relations and there is no reason to think that this has changed.”

She adds that while the East-West footprint of SCC cases is less dominant than in recent years, with a greater degree of geographical diversity among cases, Russian-related cases remain “the most prevalent”.

RISING COMPLEXITIES

It would be fair to remark that arbitration has lost some of its edge as being fast and cost-efficient, and this has urged businesses to re-assess the effectiveness of arbitration as a form of dispute resolution. However, litigation itself has as many challenges, and fails to offer much competition in that respect.

Magnusson states that there has been a lot of debate surrounding the cost and time of arbitration, which has for the most part been “very constructive”. But, she notes, it is also important to highlight that the disputes the institution deals with “reflect what is happening in business on a global level”.

International business has become more complex and interconnected, something very evident in the SCC’s caseload. The rise of large complex multi-national, multi-party commercial disputes has had a significant impact on arbitration, leading to lengthier and more expensive cases.

The SCC is well-placed as a forum for discussions relating to reform; being a neutral venue for individual disputes, Magnusson points out that the SCC “can also be a neutral venue to have forward-facing/visionary discussions”. She adds that institutions are in a unique position to be able to take leadership on these issues, stating “this is an important role for us to fulfil”. However, she also emphasises that the SCC needs to be “progressive in developing tools to help parties to be as efficient as possible”.

Procedural rules and national arbitration legislation aim to adapt to account for these developments and there is currently a committee in place to revise the SCC rules, which is expected to publish an updated version by 2017 – the same year the SCC will be celebrating its centenary. Magnusson predicts that there are likely to be some “visionary changes” in the new rules.

She tells CDR: “I don’t expect there to be changes to the DNA of SCC arbitration.” However, there are likely to be changes that reflect opinions and wishes of the parties that are seen before the SCC that “reflect changes in relation to what is going on around us”.

One such example is likely to be the relatively large volume of investor-state disputes (ISDS) under the SCC rules, which Magnusson predicts “will be reflected in some capacity. But it is too early to say how this will be done”.

DISPELLING MYTHS

In recent years there has been an intensifying debate surrounding ISDS. Magnusson notes that the SCC has a key role when it comes to communicating proper facts and numbers – conveying that ISDS is simply a system that enforces certain policy decisions rather than confusing it with the policy itself.

Magnusson explains: “ISDS is not a perfect system, and as in any system there is room for improvement, but unfortunately much of the critique is not very solution-oriented but more focused on saying ‘no’.”

She points out that to some extent ISDS has become a target for voices against free trade and globalisation in general, and that “little effort has been put into properly understanding the function and benefits of international arbitration in an international context”.

“Here we have an audience that [is] not necessarily an arbitration audience but is made up of civil society and politicians, decision-makers at large. It is very important that we take it upon ourselves as an institution to be part of the discussion and to be a neutral sounding board,” she says.

Magnusson has become very outspoken on this issue, by seeking to shed light on an area that is so often misinterpreted and misunderstood. In the midst of public criticism, changes to the current system are already underway. She explains that the current debate on ISDS is largely targeting substantive terms, although there is also debate surrounding procedural issues too, pointing out that “the result is a rather unfortunate mix of the two”.

She emphasises that institutions have a unique responsibility to take leadership in this discussion, “arbitration is a fantastic invention by the international community to solve disputes” and should be recognised as such.

ARBITRATING FOR PEACE

As a direct product of international relations – arbitration is not only about compensation but more importantly it is about keeping the peace. Arbitration as a mechanism for peace is a key theme of the SCC’s centennial celebrations which will also see the launch of the book Arbitrating for Peace.

The publication is dedicated to demonstrating the power of international arbitration in complex geopolitical issues, with eminent contributors including Jan Paulsson, David W. Rivkin, Karl-Heinz Böckstiegel, Meg Kinnear and Gary Born.

This is not a new idea, in fact it can be traced right back to the origins of arbitration – where it has been an important instrument to resolve cross-border disputes in complex geopolitical contexts. Even the term ‘arbitrator’ is synonymous with peacemaker or peacekeeper. Magnusson emphasises that international arbitration has contributed to maintaining peaceful relations between states through a number of state-to-state boundary disputes.

She says: “The use of international arbitration over the centuries sends a positive message of the ability of the international community to reinvent itself to find constructive mechanisms to resolve complex cross-border problems, be it in international trade or politics, to the benefit of all parties involved.”

The ICC’s constitution states that “to further the development of an open world economy with the firm conviction that international commercial exchanges are conducive to both greater global prosperity and peace among nations”. This philosophy is shared by Magnusson, who recognises the integral role played by international trade in building relations between countries.

She highlights the need for common rules for international arbitration as one of the elements safeguarding the development of international trade, even where political and economic systems vary significantly.

She concludes: “I think it is no coincidence that the language used by delegations in conjunction with the signing of the New York Convention in 1958 was that the Convention would contribute to ‘peace and prosperity’.”

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